Retirement at 60, the plan:

magd36

I’m planning to retire at 60 in 3 months time.  Here’s my rough intention:

Needs: (excluding state pension):

8 years at 45k until state pension kicks in.

3 years at 35k until wife’s state pension kicks in.

25k thereafter.

If I reach beyond 80, 40k from State, DB and Wife’s DB should hopefully be enough.

Situation:

110k ISA

15k DB + 100k Lump Sum

250k DC -> Taking 25% Lump Sum (62k)

50k DC Leaving untouched as safety net

Plan:

Use 36k to buy SIPP for wife so combined with her pension she will use personal allowance until her state pension kicks in (and get 20% tax benefit). Will use previous years allowance to do this.

Invest lump sums in 50-50 split of S&S and Cash ISA’s

Thinking is I want to avoid risk of reduction in Tax Free DC pension allowance as well as likely Tax rises. Also want cash to ride out any stock market downturn should it happen.

Anyone see any flaws and will a Financial Advisor find any earth shattering improvements?

Mark_d

Personally I wouldn't bother with the lump sums and ISA unless there is something specific you want to splash out on.  I'd put everything in the SIPP

DRS1

Use 36k to buy SIPP for wife so combined with her pension she will use personal allowance until her state pension kicks in (and get 20% tax benefit). Will use previous years allowance to do this.

Not sure I follow this bit.  I assume you mean you will give your wife £36k so she can contribute to a SIPP?  Does she have the earnings to do that?  You say you need to use previous years annual allowance (I assume that is what you mean?). Do you mean her annual allowance and not yours?  It reads as if you are thinking of making the payment yourself and using your allowances.

Minor note but the lump sums come to £160k.  Even with two of you it will take 4 years to get that into  your ISAs.  I'd suggest staggering the payments but you can't do that with the DB pension.

magd36

Mark_d said:

Personally I wouldn't bother with the lump sums and ISA unless there is something specific you want to splash out on.  I'd put everything in the SIPP

If the 25% tax free reduces and taxes rise (both of which I think are likely) I don’t think there will be a benefit. I also may not have time for a market crash to recover so prefer a more balanced risk 

leosayer

Has your wife earned salary in this tax year? When will she retire?

Full state pension is currently £11,973. Are you both entitled to this? You only seem to be accounting for £10k each.

How are you invested?

magd36

DRS1 said:

Not sure I follow this bit.  I assume you mean you will give your wife £36k so she can contribute to a SIPP?  Does she have the earnings to do that?  You say you need to use previous years annual allowance (I assume that is what you mean?). Do you mean her annual allowance and not yours?  It reads as if you are thinking of making the payment yourself and using your allowances.

Minor note but the lump sums come to £160k.  Even with two of you it will take 4 years to get that into  your ISAs.  I'd suggest staggering the payments but you can't do that with the DB pension.

Apologies. It will be my wife’s annual allowance £15k per year so £45k available using this and previous 2 years. Her DB pension is 6k so 6k of her personal allowance still left.

Fair point about the ISA taking 4 years. I worry about a reduction in the 25% tax free. Something I’ll consider and run the numbers. Thanks

dunstonh

magd36 said:

Mark_d said:

Personally I wouldn't bother with the lump sums and ISA unless there is something specific you want to splash out on.  I'd put everything in the SIPP

If the 25% tax free reduces and taxes rise (both of which I think are likely) I don’t think there will be a benefit. I also may not have time for a market crash to recover so prefer a more balanced risk 

The tax wrapper and the investments in the tax wrapper are two different things.
You can hold deposits inside a pension.

Apologies. It will be my wife’s annual allowance £15k per year so £45k available using this and previous 2 years.

Is she a shareholding director or have access to employer contributions that could be used to pay that?
If no, then you cannot use carry forward from previous years.

Isthisforreal99

magd36 said:

DRS1 said:

Not sure I follow this bit.  I assume you mean you will give your wife £36k so she can contribute to a SIPP?  Does she have the earnings to do that?  You say you need to use previous years annual allowance (I assume that is what you mean?). Do you mean her annual allowance and not yours?  It reads as if you are thinking of making the payment yourself and using your allowances.

Minor note but the lump sums come to £160k.  Even with two of you it will take 4 years to get that into  your ISAs.  I'd suggest staggering the payments but you can't do that with the DB pension.

Apologies. It will be my wife’s annual allowance £15k per year so £45k available using this and previous 2 years. Her DB pension is 6k so 6k of her personal allowance still left.

You are way out on that assumption.

Marcon

magd36 said:

DRS1 said:

Not sure I follow this bit.  I assume you mean you will give your wife £36k so she can contribute to a SIPP?  Does she have the earnings to do that?  You say you need to use previous years annual allowance (I assume that is what you mean?). Do you mean her annual allowance and not yours?  It reads as if you are thinking of making the payment yourself and using your allowances.

Minor note but the lump sums come to £160k.  Even with two of you it will take 4 years to get that into  your ISAs.  I'd suggest staggering the payments but you can't do that with the DB pension.

Apologies. It will be my wife’s annual allowance £15k per year so £45k available using this and previous 2 years. Her DB pension is 6k so 6k of her personal allowance still left.

Fair point about the ISA taking 4 years. I worry about a reduction in the 25% tax free. Something I’ll consider and run the numbers. Thanks

Is your wife earning £60K+? You can't use carry forward unless her earnings in the year she actually makes the SIPP contribution are sufficient to do so (taking into account any personal contributions she has made to her workplace DB scheme).

magd36

leosayer said:

Has your wife earned salary in this tax year? When will she retire?

Full state pension is currently £11,973. Are you both entitled to this? You only seem to be accounting for £10k each.

How are you invested?

Yes Wife still earning. Retiring in next year or so.

Yes I just used £10k as a quick figure but it’s really closer to 12k.

My DC is a standard life company pension split into standard fund, pre retirement fund and post retirement fund. I need to think what I do fund wise post retirement. Low fees and they contribute 8%. My £50k one is a SIPP with AJ Bell.

magd36

The tax wrapper and the investments in the tax wrapper are two different things.

You can hold deposits inside a 

Is she a shareholding director or have access to employer contributions that could be used to pay that?
If no, then you cannot use carry forward from previous years.

I understand the investment/tax wrapper however don’t understand the relevance to anything or don’t get the point you’re making. Sorry.

Regarding paying in unused pension allowance, I thought everyone could pay up to 100% of their salary going back 2 years. If her DB uses £4k she has £16k left from a £20k salary. Using previous 2 years she can invest £32k as a lump sum in a SIPP. If not why not?